Crypto Market Faces Tension as Gravity Bridge Exploited and Bitcoin ETFs Bleed

The Gravity Bridge protocol, which enables asset transfers between Ethereum and the Cosmos ecosystem, was hacked for approximately $5.4 million. The breach, which occurred on Saturday, led to a halt in validator operations as the team investigated the incident.

The stolen funds include roughly $4.3 million in USDC, 274 wrapped ETH worth around $553,000, and other cryptocurrencies. A portion of the loot was quickly cycled through an instant-swap service before alerts were sent out.

Gravity Bridge relies on its full validator set to authorize transfers, a design choice once considered more decentralized than using a small multi-signature group.